HSA or Not? 1st Child Born in Feb

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UnLearnYourself
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Joined: Tue Feb 01, 2011 9:19 pm

HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 9:26 am

I'm in 2019 open enrollment trying to decide whether to opt into an HSA or PPO health insurance program, and if I choose the HSA how much I should be contributing on an annual basis - with the main factor being my wife and I will be having out first child in February.

I know there are a lot of factors that go into this decision, and I could break down the costs/premiums etc of my health care options plus our general financial situation a bit later on.

One question I have now is are there any cost effective advisors who can provide us a custom analysis for this decision (knowing I have till 11/8 to choose?), or am I just as well off sharing the details with Bogleheads and receiving thoughtful advice here?

topcatin
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Re: HSA or Not? 1st Child Born in Feb

Post by topcatin » Mon Nov 05, 2018 9:43 am

If I were you, I would choose the best insurance option which would pay the maximum for the OBGYN visits,Hospital,Birth etc.
If your HSA plan is going to cost monthly for example : $400 and you get a $1000 employer contribution yearly, then your cost for this plan is roughly $400 x 12 MONTHS( $4800 - $1000) = $3000 for the year.

Check your deductibles as well. We had bad options and had to pay upto $5000 out of pocket and then the plan paid.

You should look at what your deductible is going to be for the Hospital expenses (birth) and go from there. Compare your HSA plan and see if you are getting a contribution from the Employer. Compare the plans to see how much you would pay out of pocket for the premiums.
I would compare all your options.

You could also go for the plan which pays the most till the birth of the little one and then change over to a cheaper plan after the birth when you have to add your baby to the plan. In other words, pay high and get the best plan till Feb and then just change over to a mid-priced plan if that makes your pocket happy. Does that make sense? Please feel free to message me if you have any questions.

UnLearnYourself
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Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 10:04 am

My company will fund my HSA with $1,250 Jan 1 with a plan that includes me + my wife.

Child born in February will be a qualifying event so I suppose I could technically change to a PPO at that point if I wanted to, and my understanding is I'd still get to keep the $1,250 and any additional contributions we make to the HSA should we then turn back to it in 2020...if that makes sense. It's honestly all a bit dizzying to me, so I'm hoping somebody around here is well versed enough to cut through the noise and give simple and sound advice. FYI I'm in the 24% tax bracket.

Here's my best breakdown of the options without getting too granular:


PPO 90
Monthly Premiums
Employee + Spouse: $305.09
Family: $508.50

Annual Deductable: $250 pp / $500 family
Coinsurance: 10%
Annual Out of Pocket: $1,500 pp / $3,000 family (only applies to certain services)
Prescription/PCP/Specialist: Copays but no deductible applies

PPO 100
Monthly Premiums
Employee + Spouse: $433.73
Family: $698.34

Annual Deductable: None
Coinsurance: None
Annual Out of Pocket: $750 pp / $1,500 family (only applies to certain services)
Prescription/PCP/Specialist: Copays

HSASaver
Monthly Premiums
Employee + Spouse : $148.85
Family: $243.84

Annual Deductable: $1,500 employee / $2,700 family
Coinsurance: 10%
Annual Out of Pocket: $2,500 pp / $5,000 family (only to all services except preventative)
Prescription/PCP/Specialist: Full cost until deductible met, then copays or 10% coinsurance

blevine
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Location: New York

Re: HSA or Not? 1st Child Born in Feb

Post by blevine » Mon Nov 05, 2018 10:22 am

When you say PPO vs HSA, this seems a misunderstanding of the options on your part. PPO means Preferred Provider Option, and that only speaks to the fact you will have a list of in-network doctors, possibly the same list for all 3 options. It is possible all 3 options allow you to go outside this network for lesser reimbusement. I can’t be sure, you should check but I would bet the 3 plans do not differ in terms of what docs you can see. These are similar to 3 options I have, and all have same docs covered.

The difference is expectation about how heavily you will use the insurance. The more you expect to use it, the more expensive premiums will be beneficial. With the cost of delivering a baby alone, the most expensive option may be beneficial. The only way I would do HSA with a baby on the way, is if you can well afford all doc bills out of taxable savings, and you just want a tax deferred vehicle in addition to 401k, ira etc. Even then may not make sense. Any year you use hospital services, usually the more expenesive insurance is worthwile. If family is healthy and you are maxing out 401k, HSA may be worth considering later.

UnLearnYourself
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Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 10:25 am

The PPO 90 and PPO 100 do not allow an HSA. That is what my company calls those plan options, so I just listed them as they are named.

topcatin
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Joined: Tue Sep 15, 2015 6:58 am

Re: HSA or Not? 1st Child Born in Feb

Post by topcatin » Mon Nov 05, 2018 10:30 am

UnLearnYourself wrote:
Mon Nov 05, 2018 10:04 am
My company will fund my HSA with $1,250 Jan 1 with a plan that includes me + my wife.

Child born in February will be a qualifying event so I suppose I could technically change to a PPO at that point if I wanted to, and my understanding is I'd still get to keep the $1,250 and any additional contributions we make to the HSA should we then turn back to it in 2020...if that makes sense. It's honestly all a bit dizzying to me, so I'm hoping somebody around here is well versed enough to cut through the noise and give simple and sound advice. FYI I'm in the 24% tax bracket.

Here's my best breakdown of the options without getting too granular:


PPO 90
Monthly Premiums
Employee + Spouse: $305.09
Family: $508.50

Annual Deductable: $250 pp / $500 family
Coinsurance: 10%
Annual Out of Pocket: $1,500 pp / $3,000 family (only applies to certain services)
Prescription/PCP/Specialist: Copays but no deductible applies

PPO 100
Monthly Premiums
Employee + Spouse: $433.73
Family: $698.34

Annual Deductable: None
Coinsurance: None
Annual Out of Pocket: $750 pp / $1,500 family (only applies to certain services)
Prescription/PCP/Specialist: Copays

HSASaver
Monthly Premiums
Employee + Spouse : $148.85
Family: $243.84

Annual Deductable: $1,500 employee / $2,700 family
Coinsurance: 10%
Annual Out of Pocket: $2,500 pp / $5,000 family (only to all services except preventative)
Prescription/PCP/Specialist: Full cost until deductible met, then copays or 10% coinsurance
Before you choose please find out what does "(only applies to certain services)" mean?
You could go with the PP0100 plan till the birth and then switch over to the HSASaver, you would still get the employer contribution but it may be pro-rated which is ok.
If you look at the annual deductable for the PPO100 is none compared to $2700 on the HSA. If you choose the HSA, you will most likely have to pay upto $2700 and then they will take into account the $5000 out of pocket max. Call the insurance and ask them what happens if you get a $4000 hospital bill and compare. I think the best is to go with PPO 100(till the birth) for the first couple of months and then switch over to the HSA plan with the whole family for the rest of the year.

UnLearnYourself
Posts: 111
Joined: Tue Feb 01, 2011 9:19 pm

Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 11:10 am

I may be looking at this incorrectly, but I'm considering a simple "worst case" scenario where I max out my out of pocket costs for each plan and these are the numbers I'm looking at assuming March - December coverage:

PPO90: $5,085 premium + $1,500 OOP = $6,585
PPO100: $6,980 premium + $1,500 OOP = $8,480
HSASaver: $2,438 premium - $1,250 company contribution + $5,000 OOP = $6,188

In this view doesn't the HSA still make sense? And if I don't end up maxing out that out of pocket I may accrue tax advantaged benefits? Nevermind the fact that my $5,000 OOP has additional 24% tax advantages assuming I'm rapidly funding the HSA?

My wife and I have enough savings to technically pay out of pocket, so we don't need to shield ourselves from financial trouble should we be slammed with a $5,000 bill, worst case.

blevine
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Location: New York

Re: HSA or Not? 1st Child Born in Feb

Post by blevine » Mon Nov 05, 2018 11:51 am

The “fixed” ob gyn costs of $5000 assumed, seems low. We paid that 20 years ago, costs are same today ? And I find it hard to believe that this will be your only cost.

Finally, these events such as having children do allow switch to add the child, I would check if you can also change among these plans as well, maybe so.

As to your response to my post, I dont think you understand. I am suggesting you confirm the HSA plan is indeed a PPO and not HMO plan, I would think and hope so. I would NEVER go for an HMO. Selection of providers is more important than the financial decisions that you are focused on. The point was not to justify your choice of wording.

UnLearnYourself
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Joined: Tue Feb 01, 2011 9:19 pm

Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 12:38 pm

Sorry, yes our HSA plan is a PPO.

blevine
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Location: New York

Re: HSA or Not? 1st Child Born in Feb

Post by blevine » Mon Nov 05, 2018 3:12 pm

Well I switched from low deductible to high/HSA when my kids were older and deemed healthy. Definitely for most healthy families HSA is a better choice, but early childhood can be an adventure healthwise.

Another thing to consider, regarding PPO, if your favorite docs are out of network, isn’t it best to have paid less to the insurer, more to your HSA, so you can go where you want ? That more than anything prompted me to switch. My employer changed insurers and some favorite docs are now out of network. Decided I want to have control over my destiny, and HSA seemed a way to do it. That plus my older kids just weren’t using the plan heavily and we were not getting much paid out last couple of years.

UnLearnYourself
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Joined: Tue Feb 01, 2011 9:19 pm

Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 3:22 pm

blevine wrote:
Mon Nov 05, 2018 11:51 am
The “fixed” ob gyn costs of $5000 assumed, seems low. We paid that 20 years ago, costs are same today ? And I find it hard to believe that this will be your only cost.

Finally, these events such as having children do allow switch to add the child, I would check if you can also change among these plans as well, maybe so.

As to your response to my post, I dont think you understand. I am suggesting you confirm the HSA plan is indeed a PPO and not HMO plan, I would think and hope so. I would NEVER go for an HMO. Selection of providers is more important than the financial decisions that you are focused on. The point was not to justify your choice of wording.
Are you referring to out of pocket costs? If so, if I end up paying $5,000 out of pocket I will meet my max and essentially get free health care for the remainder of the year.

Again, this is all very confusing to me. And we tried to ask the hospital, etc what we should expect for costs and they said call the insurance company. It seems like an endless loop with no real clarity...which is why I came here to perhaps cross paths with people who were well-versed or had experience navigating such plans.

So I suppose this takes me back to one of my original questions - are there professionals for hire that can help navigate all this?

miriamele
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Joined: Mon Sep 24, 2018 3:52 pm

Re: HSA or Not? 1st Child Born in Feb

Post by miriamele » Mon Nov 05, 2018 4:03 pm

UnLearnYourself wrote:
Mon Nov 05, 2018 11:10 am
I may be looking at this incorrectly, but I'm considering a simple "worst case" scenario where I max out my out of pocket costs for each plan and these are the numbers I'm looking at assuming March - December coverage:

PPO90: $5,085 premium + $1,500 OOP = $6,585
PPO100: $6,980 premium + $1,500 OOP = $8,480
HSASaver: $2,438 premium - $1,250 company contribution + $5,000 OOP = $6,188

In this view doesn't the HSA still make sense? And if I don't end up maxing out that out of pocket I may accrue tax advantaged benefits? Nevermind the fact that my $5,000 OOP has additional 24% tax advantages assuming I'm rapidly funding the HSA?

My wife and I have enough savings to technically pay out of pocket, so we don't need to shield ourselves from financial trouble should we be slammed with a $5,000 bill, worst case.
+1, that's the way I see it. If you can fund the max out of pocket now, do that and keep the HSA money invested if your plan has investment options or allows you to roll it over to one that does.

UnLearnYourself
Posts: 111
Joined: Tue Feb 01, 2011 9:19 pm

Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Mon Nov 05, 2018 4:13 pm

miriamele wrote:
Mon Nov 05, 2018 4:03 pm
+1, that's the way I see it. If you can fund the max out of pocket now, do that and keep the HSA money invested if your plan has investment options or allows you to roll it over to one that does.
They do have investment options once you accrue something like $7k. I assume whatever we put into it for 2019 we'd end up using, for the most part...so it'll likely be a year or two before we get to the point of being able to invest it. Still appealing to me.

Just a lot of swirling #s so I want to field opinions prior to pulling the trigger in a couple days.

ne2ca28
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Joined: Sat Nov 08, 2014 6:19 pm

Re: HSA or Not? 1st Child Born in Feb

Post by ne2ca28 » Mon Nov 05, 2018 5:06 pm

We chose the HSA and I stuck with it for past few years (kid is 3). Our hospital bill would have been $75k (Healthy baby, though breech (butt first). C-section with 5 day stay). Paid $5k deductible (max OOP was 8k, but all of our services were in network and 0% coinsurance). Free Dr visits, etc for rest of the year.

You should definitely account for the tax savings here and I think you have the PPO 90 calc wrong - OOP looks to be $3k instead of $1500. It looks like the premium of the PPO 90 is not too much more than the worst case in the HSA (assuming all "in-network" providers), so you may want to consider it for the long haul.

I agree with the other poster to see what the "(only applies to certain services)" is all about, which may make your decision easier if the HSA covers more.

I assume your network of physicians is the same regardless of the plans (was the case for me as all were technically PPO). There should be protections for out of network Drs in the hospital (e.g. anesthesiologist that the hospital chooses), but it doesn't hurt to check with insurance / hospital / OBGYN.

Seems like you understand that you'll get free healthcare for the remainder of the year, so take advantage of it. Maybe you can use that to finally get some physical therapy on the sore knee or something.

blevine
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Location: New York

Re: HSA or Not? 1st Child Born in Feb

Post by blevine » Mon Nov 05, 2018 10:07 pm

From a purely financial decision, seems somewhat a wash.
At a younger age I didn’t want to deal with extra account, receipts etc, if I was not going to come out way ahead.

Once my kids were older, I did the math and we got to point where we weren’t getting out what we put in some years, and concluded we were leaving money on the table. Partly that was low medical costs, partly ever increasing premiums. Overall still prefer not to deal with another account, but seems at least you get flexibility and some years you come out ahead.

I dont think either decision is a mistake given your options. Best of luck.

UnLearnYourself
Posts: 111
Joined: Tue Feb 01, 2011 9:19 pm

Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Wed Nov 07, 2018 8:51 am

So after speaking to the insurance company directly last night and getting a sense of what my likely out of pocket costs for each of my plan options may be when we birth our child in February, here's how I've simplified my thinking:

1. "PPO90" - They believed that I will likely spend the full $3,000 out of pocket max for this plan + my $5,085 annual premium, my costs will be at least $8,000 on the year + a slow trickle of additional expenses through the year. This appears to be my most expensive option for 2019.

2. "PPO100" - The birth will likely only cost $150 out of pocket, but I'm still on the hook for my nearly $7,000 premium on the year + a slow trickle of additional expenses through the year.

3. "HSA Saver" - I will likely be on the hook for my full $5,000 max out of pocket for the birth of my child + my $2,400 premium, so about $7,400 in expenses on the year. However my company will contribute $1,250 on Jan 1, so that cost nets out at about $6,150, which will be my cheapest option. Then for my $5,000 labor bill I can request that I be put on a payment plan through the hospital at 0%. Then I can fund my HSA to the tune of at least $5,000 and pay my hospital bill payments from that HSA and bank the 24% tax savings. Depending on what that monthly bill costs (sounds like I have some influence over what that monthly payment is set to) I may actually end up being able to roll some of my 2019 HSA contributions over into 2020...which is what I will probably try to do since that 0% payment plan isn't costing me any extra interest dollars by not paying off the entirety of the $5k in 2019 assuming the hospital allows that.

Verdict = HSA seems to be the clear winner to me from a couple angles. Then as a bonus as soon as the child is born I'll get free healthcare for the rest of the year to take care of momma, baby, and any ailments I may have.

Oddball
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Re: HSA or Not? 1st Child Born in Feb

Post by Oddball » Wed Nov 07, 2018 5:23 pm

My wife and I just had our first child in Sept of this year and much to our surprise our total cost was something around $2000-2500 out of pocket for the birth. Normal birth, went into the hospital early on a Wednesday morning and went home Friday evening. We have a $7000 max OOP HSA plan and even with all of the doc visits pre and post birth we are still not going to hit our $7k max OOP for the year.

We use our HSA fund to pay health care costs as they come up, so we don't feel like we really had to pay anything "OOP" since we have the extra funds already allocated for that purpose. I have always been happy with my HSA plan and don't see a reason I would switch to a non-HSA option.

UnLearnYourself
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Re: HSA or Not? 1st Child Born in Feb

Post by UnLearnYourself » Wed Nov 07, 2018 7:15 pm

Oddball wrote:
Wed Nov 07, 2018 5:23 pm
My wife and I just had our first child in Sept of this year and much to our surprise our total cost was something around $2000-2500 out of pocket for the birth. Normal birth, went into the hospital early on a Wednesday morning and went home Friday evening. We have a $7000 max OOP HSA plan and even with all of the doc visits pre and post birth we are still not going to hit our $7k max OOP for the year.

We use our HSA fund to pay health care costs as they come up, so we don't feel like we really had to pay anything "OOP" since we have the extra funds already allocated for that purpose. I have always been happy with my HSA plan and don't see a reason I would switch to a non-HSA option.
Congrats on the baby and shockingly low out of pocket birth cost! I hope we're pleasantly surprised to a similar tune, but I'm heading into it expecting the full $5k.

Nappyloxs
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Re: HSA or Not? 1st Child Born in Feb

Post by Nappyloxs » Thu Nov 08, 2018 12:33 am

What is your current insurance?

We had our child last year in June. We had HSA for a 2 years and maxed it out with employer contribution. So if you currently have an HSA, factor that in. We had a few dr visits and prenatals prescriptions that contributed to deductible. When we had our first born, the bill was over 3k which we paid with HSA. Since the delivery was count towards my wife’s deductible of $1,500. She easily met the deductible and to our surprise, most of the delivery charges were refunded a week or so later.

You need to check with your insurance. Labor and deliver counts on your wife’s/family deductible. February due date is early in year, so you won’t have paid much towards deductible. Don’t hesitate to make a few appointments before then for yourself to count towards deductible. They may quote $5k but it may be much less.

Also, HSA rollover which is why it can be a better option than FSAs. After a certain amount you can actually invest the HSA into stock market and have it as a quasi-retirement account.

Congratulations! Don’t worry too much about cost as in the end, you will make out because of all the first year visits and the baby will be priceless.

motorcyclesarecool
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Re: HSA or Not? 1st Child Born in Feb

Post by motorcyclesarecool » Thu Nov 08, 2018 7:04 am

UnLearnYourself wrote:
Mon Nov 05, 2018 9:26 am
I'm in 2019 open enrollment trying to decide whether to opt into an HSA or PPO health insurance program, and if I choose the HSA how much I should be contributing on an annual basis - with the main factor being my wife and I will be having out first child in February.

I know there are a lot of factors that go into this decision, and I could break down the costs/premiums etc of my health care options plus our general financial situation a bit later on.

One question I have now is are there any cost effective advisors who can provide us a custom analysis for this decision (knowing I have till 11/8 to choose?), or am I just as well off sharing the details with Bogleheads and receiving thoughtful advice here?
Well, Bogleheads are cheap, at least.

We changed OB practice after kid #1. OB #2 gave us a fantastic information packet with a ballpark average insurance cost for their services. So ask your doctor.

What’s tricky about a February birth in an HDHP is that much of the pricy prenatal care (20 week ultrasound and labs galore) took place in the prior year.

It’s going to come down to your estimate of your total annual outlay, which this thread contains insufficient information to determine at this time.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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